If you're looking for some new additions to your income portfolio, then take a look at the two ASX dividend stocks listed below.
They have been named as top buys by brokers. Here's what they are saying about them:
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Australian Foundation Investment Co Ltd (ASX: AFI)
The first ASX dividend stock that analysts are positive on is Australian Foundation Investment Company. Bell Potter has a buy rating and $8.19 price target on its shares.
The broker is positive on the investment company. This is due to its long-term buy and hold approach, robust balance sheet, and recurring revenues. It explains:
Australian Foundation Investment Co is a closed end fund investing predominantly in Australian and New Zealand equities. The investment philosophy seeks to identify well-priced priced companies by considering: (1) the uniqueness of assets, brands and footprints; (2) long-term sustainability characteristics, return on invested capital and the ability to grow or maintain market share; (3) recurring revenues and the likelihood of consistent earnings for shareholders; (4) confidence in the pedigree of the Board and management team; and (5) lowly geared balance sheets. The long-term buy-and-hold approach results in a low level of capital gains tax payable, and the provision of internal investment resourcing keeps the cost base low with scale (0.14% MER).
As for income, Bell Potter expects 3.5%+ dividend yields from its shares in the near term.
Lottery Corporation Ltd (ASX: TLC)
Another ASX dividend stock that could be a good option for income investors is Lottery Corp.
Morgans is a fan of the lottery operator and has an add rating and $5.40 price target on its shares. It believes the company is well-placed due to strong lottery volumes. It said:
TLC's FY24 result was impressive, driven by a favourable year for Lotteries and strong active customer growth. Despite lapping a record period of growth in Lotteries, we remain positive on the stock as current lottery volumes continue to perform well. The company mentioned that Saturday Lotto will be the next game to receive an update, which should benefit the base game divisions significantly and likely come with a price increase, offsetting some recent softness. Additionally, TLC reported a leverage ratio of 2.5x, below the guided range of 3-4x, and has expressed interest in renewing the VIC licence. Based on our estimates, TLC is set to deliver a 4.5% FCF yield and a 4% [now 3.75%] dividend yield in FY25. The stock trades in line with its historical valuation ranges and we view it as a solid option for investors seeking stability.
In respect to income, the broker is forecasting a 19 cents per share dividend in both FY 2025 and FY 2026. Based on the latest Lottery Corporation share price of $5.06, this will mean fully franked yields of 3.75%.
